Canada to Fight EU's 'Dirty' Label on Tar Sands Oil

OTTAWA — A European Union plan to label crude from the Alberta oil sands as dirty is unfair and could damage Canada's bid to find new export markets, the Canadian resources minister said at the start of a mission to lobby against the idea.

As part of a plan to cut greenhouse gases from transport fuel, the EU's executive commission has developed a Fuel Quality Directive that would single out oil from Alberta's tar sands as more polluting than conventional crude.

Natural Resources Minister Joe Oliver, speaking at the start of a week-long trip to Paris, Brussels and London, said the directive should be changed to ensure it does not discriminate against crude from the oil sands.

"We think that's critical as an alternative to what we view as a flawed and ineffective approach that's proposed by the commission," he told Reuters in an interview from Paris.

Extracting crude from the clay-like Alberta oil sands requires more energy than conventional oil production. Environmentalists say that increases greenhouse gas emissions, making the oil sands a top target for the green movement.

Ottawa is unhappy the directive would not penalize Russia, which both burns and releases natural gas while extracting oil. Oliver said this means Russian crude extraction produces at least as many emissions as tar sands oil, if not more.

"If you're giving a free pass to a high emitter who happens to be one of the biggest exporters into the Union, then how are you achieving your objectives? This is all very logical, it's hard to argue against," he said.

Last year, amid heavy Canadian lobbying, the EU held an inconclusive vote on the directive and then decided to assess the full impact of the plan. That assessment is due in the next few months, paving the way for another vote.

Although Canada sends almost no crude to the EU now, that could change if proposals to create pipeline capacity from Alberta to Canada's East Coast are successful.

"We're not exporting to the EU at the moment but we don't want to see our crude oil stigmatized, which could possibly have implications elsewhere," said Oliver, adding that Canada did not oppose the goals of the fuel quality directive.

"What we want is a scientific fact-based approach that makes its judgment based on the scientific realities and not sort of a preconceived idea ... that our oil should be treated differently," he told Reuters.

Canada sends 99 percent of its oil exports to the United States. But a glut of supply and full pipelines are cutting prices, a problem that underlines the Canadian industry's need to find new markets.

The EU vote on the directive last year ended in stalemate amid misgivings from Britain and the Netherlands. Both nations have stakes in Royal Dutch Shell Plc, which operates in the oil sands, as does France's Total SA.

Oliver is meeting senior executives from both companies during his mission, as well as officials from the European Commission and industry groups. He declined to predict how successful his trip would be.

"I've got this great hand but the final results aren't yet in. We're arguing from logic and we're arguing from equity, in all fairness. You hope that prevails," he said.

A European Union plan to label crude from the Alberta oil sands as dirty is unfair and could damage Canada's bid to find new export markets, the Canadian resources minister said at the start of a mission to lobby against the idea.